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The War on Poverty and the State of the Union

Last week we marked the 50th anniversary of President Johnson’s speech declaring War on Poverty in the United States, and for many of us this milestone was an opportunity to remind ourselves and others that the safety net programs created during this period have been hugely successful in reducing the miseries associated with poverty, especially hunger and poor health, which were so common among impoverished cgroups a half-century ago.

WoP
On January 28th, President Obama will be delivering the annual State of the Union address, and it is anticipated that he will have much to say about battling income inequality. I hope he will acknowledge the War on Poverty for inspiration—and yet I doubt we will hear anything from the president about waging a new “war” on income inequality. That’s all for the best perhaps. I don’t really like the expression “war on poverty.” I don’t like wars of any sort, but especially rhetorical ones against abstract enemies. The enemy isn’t poverty or inequality; it is powerful individuals and groups that perpetuate these social and economic injustices and profit off of them. If you are going to declare war, you might as well identify your enemies.

Here’s what I hope the president will say needs to be done to reduce income inequality and rebuild the economy so that prosperity is broadly shared by everyone. What we need is more jobs that pay better wages. First, we just need more jobs period. The latest employment figures released last week show the only reason the unemployment rate is going down is because more people have given up hope of finding work. They’ve essentially taken themselves out of the labor market so they no longer get counted among the unemployed.  The labor force participation rate of African American men, for example, fell to 65.6 percent, the lowest on record. Remarkably, very little was reported about this fact.

We know that the president has declared his support for raising the minimum wage. The minimum wage must be indexed to inflation or, better yet, to productivity growth.  The latter ensures that everyone is gaining a share of prosperity as the economy grows. I’ve blogged before about the minimum wage and why those opposed to raising it are wrong, so I will refer readers to my earlier post instead of reiterating that argument here.

Most Americans Are Not benefiting from Increased Productivity
The main reason wages have become decoupled from productivity growth is because of the successful war waged against organized labor. In the first three decades after World War II, workers got their fair share of economic growth because they were able to bargain collectively with their employers. The decimation of the union movement ended that. This didn’t just happen because globalization made it possible to relocate labor in developing countries. Plenty of high-income countries lost jobs because of globalization without the same impact on unions that occurred here. The federal and state governments condoned this war on unions by allowing employers to violate labor laws with virtual impunity, and one of those laws violated all too often is paying workers less than a minimum wage.

Of course the president is hamstrung by having to deal with a divided Congress. But the president does have the capacity to raise the wages of federal contractors who work in jobs that are paid less than a living wage. There are nearly 2 million federal workers who earn less than $12 per hour, some of them making as little as $7.25, and the president can change that literally with a stroke of a pen. He does not have to seek Congress’s approval.

The War on Poverty made the modern safety net. That safety net was never as strong as it should be, so there is plenty of room for improvement but the issue of income inequality demands that the government play a more active role in the economy.  Against the advice of staff, President Johnson did not want to include a large-scale public works program in the War on Poverty. He may have had a good reason. It was nearly a full-employment economy. Today, the country faces much different conditions. We need an agenda that is every bit as focused on creating jobs and making sure they all pay a living wage as it on strengthening the safety net.

The upcoming State of the Union is a fitting occasion for President Obama to pay homage to his predecessor’s legacy, and since support for reducing income inequality is polling so well these days it’s a good opportunity to build a case for some substantive action. Todd Post

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